[HISTORY: Adopted by the Borough Council of the Borough of New Cumberland as indicated in article histories. Amendments noted where applicable.]
[Adopted 10-9-2019 by Ord. No. 703]
This article shall be known as the "Fire Insurance Escrow Ordinance," enacted and ordained pursuant to the reserved powers permitted by the Borough Code, 8 Pa.C.S.A. § 1203, and Act 93 of 1994, 40 P.S. § 638 et seq.,[1] as may be amended from time to time.
[1]
Editor's Note: See 40 P.S. § 638 of the Insurance Company Law.
A. 
No insurance company, association or exchange (hereinafter "insurer") doing business in the Commonwealth of Pennsylvania shall pay a claim of a named insured for fire damage to a building or structure located within the Borough of New Cumberland, Cumberland County, Pennsylvania, where the amount recoverable for the fire loss to the building or structure under all policies exceeds $7,500, unless the insurer is furnished by the Treasurer of the Borough of New Cumberland with a certificate required under Subsection B herein, and unless there is compliance with the procedures set forth in Subsection C herein.
B. 
Procedure for recouping unpaid municipal claims and expenses:
(1) 
Where there are delinquent taxes, assessments, penalties and user charges against the property ("municipal claims"), or there are expenses which the Borough has incurred as costs for removal, repair or securing of a building or other structure on the property (collectively, "municipal expenses"), the Secretary of the Borough shall immediately render a bill for such work, if not already done. Upon written request of the named insured specifying the description of the property, the name and address of the insurer and the date of receipt by the insurer of a loss report of the claim, the Treasurer of the Borough shall furnish a certificate within 14 days after the request to the insurer either:
(a) 
Stating that there are no unpaid municipal claims or municipal expenses against the property; or
(b) 
Specifying the nature and amount of such claims or expenses, accompanied by a bill for such amounts.
(2) 
Taxes, assessments, penalties and user charges shall be deemed delinquent for this purpose if a lien could have been filed for such claims under applicable law. Upon receipt of a certificate and bill pursuant to Subsection B(1) of this section, the insurer shall transfer to the Secretary of the Borough an amount from the insurance proceeds sufficient to pay said sums prior to making payment to the named insured, subject to the provisions of Subsection C hereof.
C. 
When all municipal claims and municipal expenses have been paid pursuant to Subsection B of this section or when the Borough Treasurer has issued a certificate described in Subparagraph B(1) indicating that there are no municipal claims or municipal expenses against the property, the insurer shall pay the claim of the named insured; provided, however, that, if the loss agreed upon by the named insured and the insurer equals or exceeds 60% of the aggregate limits of liability on all fire policies covering the building or structure, the following procedures must be followed:
(1) 
The insurer shall transfer from the insurance proceeds to the Borough Treasurer, in the aggregate, $2,000 for each $15,000 of such claim or fraction thereof.
(2) 
If, at the time a loss report is submitted by the insured, such insured has submitted to the insurer, with a copy to the Borough, a contractor's signed estimate of the cost of removing, repairing, or securing the building or other structure in an amount less than the amount calculated under the foregoing transfer formula, the insurer shall transfer to the Secretary of the Borough of New Cumberland from the insurance proceeds the amount specified in the estimate. If there is more than one insurer, the transfer of proceeds shall be on a prorated basis by all insurers insuring the building or other structure.
(3) 
Upon receipt of the above-described portion of the insurance proceeds, the Secretary of the Borough of New Cumberland, Cumberland County, Pennsylvania, shall do the following:
(a) 
Place the proceeds in a separate fund to be used solely as security against the total municipal expenses anticipated by the Borough to be required in removing, repairing or securing the building or structure as required by this article. Such costs shall include, without limitation, any engineering, legal or administrative costs incurred by the Borough in connection with such removal, repair or securing, or any proceedings related thereto;
(b) 
Mail to the named insured at the address received from the insurer a notice that the proceeds have been received by the Borough and that the procedures under this subsection shall be followed;
(c) 
After the transfer, the named insured may submit to the Borough a contractor's signed estimate of the costs of removing, repairing or securing the building or other structure, in which event the Borough Secretary shall, if such estimates deemed by the Borough Secretary to be reasonable, return to the insured the funds transferred to the Borough in excess of that amount required to pay the municipal expenses; provided, however, that the Borough has not commenced to remove, repair or secure the building or other structure in which case the Borough will complete the work;
(d) 
Pay to the Borough Secretary for reimbursement to the Borough General Fund the amount of the municipal expenses paid by the Borough;
(e) 
Pay the remaining balance in the fund without interest to the named insured upon receipt of a certificate issued by the Borough Secretary that the repair, removal or securing of the building or other structure has been completed in accordance with all applicable codes and regulations of the Borough;
(f) 
Nothing in this section shall be construed to limit the ability of the Borough to recover any deficiency in the amount of municipal claims or municipal expenses recovered pursuant to this article, or to any insurance proceeds, by an action at law or in equity to enforce the Borough codes or to enter into an agreement with the named insured with regard to such other disposition of the insurance proceeds as the Borough may deem reasonable.
Nothing in this article shall be construed to make an insurance company, association or exchange liable for any amount in excess of proceeds payable under its insurance policy or for any other act performed pursuant to this article or to make the Borough or any public official of the Borough an insured under a policy of insurance or to create an obligation to pay delinquent property taxes or unpaid removal liens or expenses other than as provided in this article.
An insurance company, association, or exchange making payments of policy proceeds under this section for delinquent taxes or structure removal liens or removal expenses incurred by the Borough shall have a full benefit of such payment, including all rights of subrogation and of assignment.
This article shall be liberally construed to accomplish its purpose to deter the commission of arson and related crimes, to discourage the abandonment of property, and to prevent urban blight and deterioration.
Any owner of property, any named insured or insurer who violates the provisions of this article or who shall fail to comply with any of the requirements hereof shall be sentenced upon conviction thereof to pay a fine not greater than $1,000 plus costs, and, in default of payment of said fine and costs, to a term of imprisonment not to exceed 30 days. Each day in which an offense shall continue shall be deemed a separate offense.
The provisions of this article are severable. If any sentence, clause or section of this article is for any reason found to be unconstitutional, illegal, or invalid, such decision shall not affect the validity of any of the remaining provisions of this article. It is hereby declared as a legislative intent that this article would have been adopted had such unconstitutional, illegal or invalid provision been included herein.